Fritz Pfister

Member brokers of the Capital Area Association of Realtors MIS reported home sales for September and the third quarter, with the association to release the official report in a couple weeks. Although September finished up 5.03% over last September they were the second fewest for a September since 2002, while the third quarter was up 22.17% over Q3 2010 there were the second fewest number of homes being sold dating back to 1998. Disappointing considering interest rates have fallen to all time lows.

Year over year home sales for September: new listings 392 down 3.02%, closed home sales 292 up 5.03%, listings going under contract 329 down 5.18%, and the median sale price of $114,125 was up 4.7% bringing the median sale price up to $110,500 through the first nine months of 2011 or up by 0.45%.

Year over year third quarter home sales: new listings 1348 down 0.66%, closed home sales 931 up 22.17%, listings going under contract 1,103 up 8.03%, and the median sale price of $114,900 up 5.31%.

Compared to the five year average September’s 292 closed home sales were down 11% and listings going under contract were down 9%. This marks 9 consecutive months where home sales failed to reach the five year average. 

With interest rates falling to an all time low the number of home listings going under contract falling behind last September’s totals is more evidence that jobs remains the key to home sales.

Lot’s of news regarding unemployment this past week. First in last Sunday’s SJR Economic Indicators report on August for the Springfield area showed that the unemployment rate fell from 7.8% to 7.5% however there were 100 fewer jobs in the workplace.

This doesn’t appear to make sense, however if you analyze how the government calculates the unemployment rate you will understand. Stick with me. September unemployment remained steady at 9.1% in spite of a reported net increase of 103,000 jobs being added, however 45,000 were striking Verizon workers who were counted as new jobs when they settled their labor dispute and returned to work.

There remains over 14 million workers counted on unemployment however 2.5 million are no longer counted since they have given up looking for work. That helps explain how the unemployment rate can decline when there are fewer jobs.

The president continues to press for his jobs bill which doesn’t have congressional support and is effectively more of the same; more stimulus spending, temporary payroll tax cuts, and tax credits for new hires. Since the $787 billion Stimulus plan failed to created jobs, there are currently 2.5 million fewer jobs in America since the Stimulus passed, has left many in congress asking why a $447 billion stimulus would work now?

It appears that both parties have dug into their ideological positions, the Democrats wanting to stick to more of the same which has failed to boost economic activity and job creation, and the Republicans who are proposing roll backs in massive legislation and regulations that have prevented hiring, however with no chance the Democrat senate would approve or the president would sign such legislation.

Due to this gridlock don’t expect any improvement in GDP growth or job creation until after the election. Voters will have a clear choice, four more years of the same big government expansion, higher taxes, more regulations, or a return to a more business friendly approach relieving businesses in America from the uncertainty regarding taxes, health insurance costs for employees, and jobs killing regulations coming from EPA and the Department of Interior.

There’s thirteen months until the elections, and sixteen months until the next congress and president take office. If we don’t change what we’re doing during that time frame the economy will bounce along the bottom or fall back into recession. Therefore don’t expect the housing market to change outside normal seasonal fluctuations in demand.

This week the AP wrote a story “Housing bust the worst since the Depression”. The story would have made me laugh if it were not so sad when reading this genius bit of analysis from the AP, quote: The American dream of home ownership has felt its biggest drop since the Great Depression according to new 2010 census figures released Thursday. The reason: a longer-term economic reality of tighter credit, prolonged job losses, and reduced government involvement.” End quote.

This reporter should be fired for journalistic fraud, less government involvement? It is the Dodd Frank Finance Law that is causing the new economic reality of tighter credit, and job losses. The housing meltdown was the result of government intervention. Period. Government’s solutions to the meltdown have made the housing market worse not better, while EPA mandates are doing their best to destroy the new home construction industry in this nation which is in a depression.

For comparison sake let’s look at the hub bub over Bank of America imposing a $5 monthly fee on their debit card users. Senator Durbin added an amendment to Dodd Frank at the behest of giant retailers to lower the fee the banks could charge on debit purchases by 50%, benefiting who? Giant retailers. Harming who? Banks, their revenue streams, profits, and shareholders. So when Bank of America reacts to government imposing regulations that costs them millions of dollars they take action in an attempt to recover some of that lost revenue. What happens? The problem Durbin caused he now blames on the banks.

The same is true for the housing meltdown. The government mandated banks make half their loans to low income families or face retribution. Millions of loans were made based upon faulty political policy and not sound economic policy. What happened? When the housing market collapsed the politicians blamed banks and Wall Street for the mess the politicians created.

These are perfect examples of government as not the solution, but government as the problem. As long as we have politicians interfering in the private sector with these anti-business laws, over reaching costly regulations, and continued threats of tax increases on the private sector where jobs are created, how can any reasonable person expect the economy to improve?

It won’t. Look around, you see what you’re going to get. Until there is a change in policy or policy makers the typical Springfield homeowner will have a 45% chance of selling their home. Through October 7, 2449 home sales have closed from 5448 home listings this year.

Something for you to think about, interest rates are the lowest on record, yet Springfield homes are selling at the slowest pace since 1998. Under any remotely sound economic policy coming out of Washington there would be record numbers of homes selling. If you want to know why your home has become difficult to sell, why your home may or may not even sell, if your home’s value declines, look no further than Washington DC and the anti-business, anti-private sector, anti-growth agenda.

As Professor Judd stated, policies are being implemented based upon political and not economic considerations. How’s that working for America?

The opinions expressed here are solely those of Fritz Pfister or identified sources, and not necessarily those of RE/MAX Professionals of Springfield, or RE/MAX International.

The final numbers are in for February 2010 home sales. Before we get to those numbers, here’s something for you to consider. For months I have been sharing with you that going forward the success of the housing market would depend upon jobs, confidence, and interest rates.
Here is the first sentence of my weekly observations from [...]